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On July 25, 2013, the Commission held its regularly-scheduled agenda meeting.  No telecommunications items were addressed on the regular agenda; however, the Commission adopted a Resolution that reduced the CHCF-A surcharge rate from 0.40% to 0.18% on the consent agenda.  In addition, the Commission adopted a Decision clarifying that opticAccess’s CPCN authority did not extend into Small LEC territories.  These and other items of interest on the Commission’s agenda are discussed below.

CONSENT AGENDA ITEMS

CHCF-A Surcharge Rate Reduced From 0.40% to 0.18% (Item 11, approved on consent) – This Resolution reduces the California High Cost Fund-A (“CHCF-A”) program surcharge rate from 0.40% to 0.18%.  Telecommunications carriers are required to revise the CHCF-A surcharge rate assessed on revenues collected from end users for intrastate telecommunications as of October 1, 2013. 
 
The Resolution determines that a reduction is appropriate in order to prevent an excessive balance on the CHCF-A fund.  It is standard Commission policy to maintain a program fund level with a reserve covering approximately six months of monthly expenditures.  If the surcharge rate remained at its current level at 0.40%, the forecasted revenue collection would increase to approximately 14 times the estimated monthly CHCF-A program expenditures.  At the current 0.40% surcharge rate, it is anticipated that approximately $72 million would be collected during the 2013-2014 fiscal year.  After accounting for CHCF-A estimated expenditures, the CHCF-A fund balance would be approximately $41 million by June 2014.  The anticipated expenses for the CHCF-A program is approximately 3 million a month.  The reduction in the CHCF-A surcharge would be consistent with Commission policy by resulting in an estimated $18 million CHCF-A fund balance in December 2014, after accounting for program expenses.  
 
A copy of the Draft Resolution underlying this item is available at the following link
 
opticAccess’s CPCN Authority Modified (Item 14, adopted on consent) – This Decision grants the Small LEC’s Petition for Modification of Decision 13-01-010.  In D.13-01-010, the Commission granted opticAccess, LLC (“opticAccess”) a certificate of public convenience and necessity (“CPCN”) to provide resold and full facilities-based local exchange telecommunications service in the territories of the Uniform Regulatory Framework (“URF”) companies’ territories, in addition to access service throughout California. 
 
The Small LECs filed a Petition for Modification explaining that D.13-01-010 contained material errors that implied that opticAccess had been authorized to provide access service in the Small LEC territories.  The Petition for Modification also noted that opticAccess did not request access services in the Small LEC territories, nor does the Commission have the legal authority to open the Small LEC territories to competition without a formal rulemaking.
 
The Decision finds that opticAccess was inconsistent throughout its application in its request for authority to provide telecommunications services and that the Small LECs requested modification to D.13-01-010 is appropriate to avoid confusion.  The Decision revises D. 13-01-010 to clarify that opticAccess is granted a CPCN to provide resold and full facilities-based local exchange service, including access service in the territories of the four URF companies (including both of Frontier’s URF entities), and interexchange services through the California. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Vodex Granted a Certification of Public Convenience and Necessity (Item 18, approved on consent) – This Decision grants Vodex Communications Corporation (“Vodex”) a certificate of public convenience and necessity (“CPCN”) to provide: (1) full facilities-based and resold competitive local exchange services throughout he service territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone, and Citizens Telecommunication Company of California, Inc.; and (2) full facilities-based and resold interexchange service in California. 
 
This Decision determines that Vodex meets the financial, technical, and environmental requirements necessary to be granted a full facilities-based CPCN.  Vodex indicates that it intends to install its facilities primarily in existing conduits and other existing buildings and infrastructures.  Under existing CEQA rules, these installations may be exempt from full review.  Therefore the Decision concludes that an expedited 21-day environmental review would  be appropriate to determine if any construction projects would be exempted from a full CEQA review.
 
In addition, the Decision requires Vodex to obtain a continuous performance bond of $25,000 and submit a Tier-1 advice letter by March 31st each year.  These additional requirements are consistent with the recent Commission decision that modified requirements for CPCN-holders.  The Decision also requires Vodex to comply with all applicable Consumer Protection Rules, and to pay annual user fee and public purpose surcharges. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Synergy Granted a Certificate of Public Convenience and Necessity (Item 25, approved on consent) – This Decision grants Synergy DAS, LLC (“Synergy”) a certificate of public convenience and necessity (“CPCN”) to provide limited facilities-based, full facilities-based, and resold local exchange services in the territories of Pacific Bell Telephone Company, Verizon California, Inc., SureWest Telephone, and Citizens Telecommunication Company of California, Inc.  The Decision also grants Synergy the authority to provide non-dominant interexchange services in the state of California. 
 
This Decision determines that Synergy meets the financial, technical, and environmental requirements necessary to be granted a full facilities-based CPCN.  Synergy indicates that it may engage in minor construction projects that include installing equipment in or on existing structures, such as existing streetlights, poles, towers, buildings, fiber, conduits, ducts, rights-of –way, trenches, and other facilities and structures of other entities.  Synergy also indicates that it may undertake minor ground-breaking activity in well used rights-of-way and exiting easements.  Since a full CEQA review may not be necessary for such projects, the Decision concludes that an expedited 21-day environmental review to determine if any construction projects would be exempted from a full CEQA review is appropriate. 
 
In addition, the Decision requires Synergy to obtain a continuous performance bond of $25,000 and submit a Tier-1 advice letter by March 31st each year.  The Decision also requires Synergy to comply with all applicable Consumer Protection Rules, and to pay annual user fee and public purpose surcharges. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
West Authorized to Acquire Indirect Control of Intrado Communications Corporation (Item 13, approved on Consent) – This Decision approves a proposed transaction where West Corporation (“West”) acquires indirect control of Intrado Communications, Inc. (“Intrado”), a wholly-owned subsidiary of Intrado, Inc. (“Intrado, Inc.”).  West is a Nebraska-based provider of technology driven voice and data solutions and does not hold any telecommunications authority in California.  Intrado holds a CPCN to provide competitive local exchange services, and is registered as a non-dominant provider of interexchange services. 
 
In 2006, Intrado, Inc. and West entered an Agreement and Plan of Merger where West acquired 100% of the outstanding shares of Common Stock in Intrado, Inc., and thereby indirectly acquired full ownership of Intrado.  However, this transaction was not approved by the Commission as required by Public Utilities Code Section 854.  Section 854 requires Commission approval before a corporation merges, acquires, or controls any public utility that is organized in conducts business in California.  West, Intrado, and Intrado, Inc. (collectively, the “Applicants”) did not apply for approval of the transaction until September 2012.
 
The application was protested by the Commission’s Safety and Enforcement Division (“SED”), who ultimately entered a Settlement Agreement with the Applicants.  To resolve the Section 854 violation, the Decision also approves the proposed Settlement Agreement, which will require Intrado to make a settlement payment of $5,000 to the State of California General Fund for violating Section 854. 
 
A copy of the Proposed Decision underlying this item is available at the following link

Statutory Deadline Extended in Commission’s Investigation into TracFone’s Business Activities (Item 19, adopted on consent) – This Decision extends the statutory deadline in the Commission’s investigation into TracFone Wireless, Inc.’s (“Tracfone”) alleged failure to collect and remit public purpose program surcharges and user fees on revenue from its sale of intrastate telephone service to California consumers.  The statutory deadline for resolving this proceeding was December 17, 2010; however, due to multiple delays caused in part by a pending application for rehearing by TracFone of Resolution T-17235, and the subsequent amendment of the scope of the proceeding to allow parties further opportunity to file briefs, the statutory deadline has been extended multiple times.  This Decision now further extends the statutory deadline from August 19, 2013 to February 19, 2014.  This additional extension will accommodate an anticipated Proposed Officer’s Decision (“POD”) that will be issued this month.  The Decision determines that an extension will allow the Commission and other involved parties the sufficient opportunity necessary to review the POD. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Statutory Deadline Extended in Commission’s Investigation of OSP for Cramming (Item 20, adopted on consent) – This Decision extends the statutory deadline in the Commission’s investigation into whether OSP Communications, LLC (“OSP”) and its alleged owner John Vogel violated Commission rules and regulations by engaging in “cramming” practices.  Specifically, the investigation inquiries into whether OSP placed unauthorized collect call charges on customer telephone bills in California.  This Decision extends the deadline for resolving this investigation from July 31, 2013 to January 31, 2014.  The statutory deadline for resolving adjudicatory cases is twelve-months, which was May 25, 2012.  The parties had previously agreed to an extension to July 31, 2012, which was further extended to July 31, 2013 by in D.12-07-012.  
 
The parties have negotiated a settlement agreement and the assigned Administrative Law Judge has prepared a proposed decision approving the settlement.  This Decision finds that an extension of time until January 31, 2014 is necessary to allow the Commission to comprehensively review the proposed decision, and allow the parties an opportunity to further negotiate a revised settlement should the Commission not adopt the proposed decision. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Customer Complaint Against Verizon Dismissed With Prejudice (Item 6, adopted on consent) – This Decision dismisses a customer complaint against Verizon.  The complaint alleged that Verizon California, Inc. (“Verizon”) and Metropolitan Telecomm of California, Inc. (“MetTel”) “slammed” the Complainant’s four telephone lines on two separate occasions.  Specifically, Complainant alleged that Verizon had unlawfully ported phone lines from MetTel to Sprint/Time Warner Cable, resulting in the Complainant having no service on his phone lines.  Verizon moved to dismiss, acknowledging that it did port the Complainant’s phone lines but that the porting was not unlawful.  Verizon explained that as the underlying network provider, it was obligated to process porting orders from MetTel, and doing so did not amount to slamming as alleged in the Complaint. 
 
The Decision finds that Complainant failed to bring his complaint forward with reasonable diligence.  In particular, the Decision explains that the Complainant’s repeatedly failed to meet procedural requirements.  In addition, the Complainant failed to attend a scheduled Pre-Hearing Conference, a mandatory meet and confer, and at a subsequent hearing.  The Decision also finds that the Complainant’s and failed to rebut allegations contained in the Motion to Dismiss.  The Decision dismisses the Complaint with prejudice. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
SIGNIFICANT HELD ITEMS
 
Petition for Rulemaking on the Privacy Practices of Telecommunications Corporations (Item 5, held by Sandoval until 9/5/13) – This Proposed Decision would deny a Petition for Rulemaking (“Petition”) to modify the privacy practices telecommunications carriers filed on November 8, 2012 by the Consumer Federation of California, The Utility Reform Network, and the Privacy Rights Clearinghouse (“Petitioners”).  The Proposed Decision would find that it is not clear that a review of telecommunications companies’ privacy practices in California is necessary at this time. 
 
The Petitioners requested that the Commission open a new rulemaking to review the privacy practices of telecommunications carriers and to develop wireless privacy standards.  The Petition identifies potential concerns related to the collection and use of personal information by telecommunications corporations, including companies that provide wireless telecommunications services.  The Petition also asks the Commission to develop standards for collecting, handling, and sharing customer information to ensure that customers are aware of what information may be collected and how that information may be used, and to protect the privacy of customer’s information.  The Petition further requests that the Commission extend the proposals identified in the Petition to third parties under contract with telecommunications providers, such as distributors of phone applications or “apps.”  In addition, the Petition suggests that existing laws and policies at the state and federal level fail to offer adequate protection for customer information.
 
The Petition was opposed by CTIA – the Wireless Association (“CTIA”) and Pacific Bell Telephone Company dba AT&T California (“AT&T”), and MetroPCS California Inc. (“MetroPCS”).  The opposing parties argued that the Petition was procedurally and substantively improper.  Specifically, the parties asserted that the Petition failed to state a clear justification for new rules and failed to include any specific language for those rules.  In addition, these parties argued that existing laws and policies already protect the privacy of customer information and additional rules are unnecessary.  The opposing parties also argued that the Petition attempted to reach non-regulated services and providers beyond the Commission’s jurisdiction, such as third-party software developers that create “apps.”
 
The Proposed Decision would recognize the importance of protecting the privacy of customer information, and notes that it is addressing issues related to privacy of energy user data in the ongoing Smart Grid proceeding.  However, the Proposed Decision would find that the Petition fails to provide examples of actual breaches of customer privacy by telecommunications corporations.  The Proposed Decision would also find that current federal and state laws exist to govern the treatment of potentially sensitive customer information held by telecommunications providers, as well as businesses in general.  Finally, the Proposed Decision would conclude that the Petition fails to clearly identify the types of information the petitioners believe are accessible to or collected by telecommunications corporations that are not currently protected by CPNI and other existing privacy protections. 
 
A copy of the Proposed Decision underlying this item is available at the following link
 
Verizon’s Deviation from Public Utilities Code Section 320 (Item 4, held by staff until 8/15/13) – This Draft Resolution would approve Verizon California Incorporated’s (“Verizon”) deviation from Public Utilities Code Section 320 for overhead distribution facilities installed without Commission approval in 2004.  Section 320 requires, where feasible, the undergrounding of all electric and communication distribution facilities to be erected in proximity to any highway designated as a state scenic highway.  Utilities may request authority for deviation through an advice letter process. 
 
In 2009, the Communications Division (“CD”) was notified of a possible Section 320 violation through a letter from a resident of Mono County, resulting in inquiries by CD Staff to Verizon.  In response to the inquiries, Verizon conducted an analysis and filed Advice Letters requesting deviation from Section 320 for the overhead distribution facilities installed in 2004 along State Route 395 in Mono County from Mile Marker 76.8 to Mile Marker 104.8. 
 
The Draft Resolution would determine that approving the deviation is appropriate because the cost of underground installations would have been twelve times the cost of an aerial installation. It explains that the CD Staff conducted a site inspection of the overhead distribution facilities and identified problematic areas that could be resolved to address safety and aesthetic concerns.  In addition, the Draft Resolution would also impose penalties on Verizon for non-compliance with Commission rules.  Therefore, the Draft Resolution would grant Verizon’s request for waiver of  Section 320 after documented completion of the following conditions:  (1) replacement of all aluminum cable dampers that are less prone to glare; (2) the completion of an audit for compliance with G.O. 95; (3) the development of a plan for future construction of overhead distribution facilities within California; and (4) payment of a $5,000 penalty for failure to comply with Section 320. 
 
In addition, the Draft Resolution will require that by July 1, 2015, Verizon shall either: (1) have started underground placement of the aerial facilities; or (2) have submitted a Tier 3 advice letter justifying the need to extend the Section 320 deviation.    
 
A copy of the Draft Resolution underlying this item is available at the following link
 
COMMISSIONER REPORTS
 
Commissioner Sandoval gave a presentation on her recent trip to Humboldt County.  During her trip, she participated in a Broadband Policy Roundtable and attended a LifeLine Public Participation Hearing.  Commissioner Sandoval was moved by a speaker at the Public Participation Hearing who explained that he had to move in order to get access to DSL.  The speaker explained that he could not get reliable wireless access and that satellite had its limits.  The speaker further described how the broadband situation in Humboldt County negatively impacted his motel business.  He stated that the broadband services were so limited that if a single guest of his motel downloaded one movie, the entire motel would operate on dial-up speed for the rest of the week.  This speaker highlights the importance of continuing to invest in broadband facilities to ensure that all customers in rural areas of California have access to broadband technology. 
 
Commissioner Peterman toured the Center for Accessible Technology’s office in Berkeley.  She was impressed with the wide range accommodations available at CAT, noting the challenges of accommodating to different disabilities.  She urged the Commission to recognize that everyone requires assistance and that people with disabilities require more assistance or different assistance that should not take away from their empowerment. 
 
President Peevey, Commissioner Florio, and Commissioner Sandoval also noted their attendance at the recent NARUC meeting. 
 
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If you have questions regarding any of the above items, or the underlying proceedings in which they arose, please feel free to contact us.
 

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